How to build a virtual power plant? Southern Power Grid uses two-pronged approach to solve the problem of demand response, rule analysis and enlightenment

China Energy Storage Network: The further growth of the proportion of new energy installed capacity and intermittent loads on the user side has put forward higher and higher requirements on the flexible adjustment capabilities of the power system. The traditional "source follows load" operation mode urgently needs to be transformed into "source-load interaction". Exploring the flexibility resources on the load side has become an important means to enhance the regulation capabilities of the power system and ensure power supply. The relevant documents of the national carbon peak and carbon neutrality "1+N" policy system, as well as the "14th Five-Year Plan for Modern Energy System", all put forward requirements for the response capabilities of the power demand side. This article comprehensively interprets the demand response rule system and significance of the southern region, and puts forward inspiration for the design of demand response mechanisms.

1. Demand response still requires supporting mechanisms

The rapid development of new energy sources has increased the random fluctuations on the power supply side; and with the promotion of power substitution on the user side, the proportion of intermittent loads such as cooling, heating, cooking and electric vehicles will also increase significantly, and the randomness of both sides of the new power system is increasing. The traditional method of simply using adjustable power sources for regulation is already overwhelmed. Making full use of flexible loads to hedge the peaks on both sides of generation and use, and relatively expensive power generation, transmission and transformation equipment, has become the adjustment method with the best marginal cost. According to rough calculations, the investment in the entire system (including power generation, transmission, transformation, and distribution) to meet the additional load of 1kW terminals is more than 10,000 yuan, and the power consumption period exceeding 95% of the maximum load of the entire network is less than 100 hours a year. The effect of saving power system investment and ensuring the safety of power supply through demand response is obvious.

The country attaches great importance to the development of demand response. The "Notice on the Action Plan for Carbon Peaking before 2030" (Guo Fa [2021] No. 23) issued by the State Council requires: "By 2030, provincial power grids will basically have a peak load response capability of more than 5%." Demand response has been used as an important means to deal with the power supply shortage caused by insufficient new adjustable power sources.

On March 22 this year, the National Development and Reform Commission and the National Energy Administration issued the "14th Five-Year Plan for Modern Energy Systems", which also attached great importance to the construction of power system flexibility, and clearly stated in the development goals: by 2025, the proportion of flexible power sources will reach about 24%, and the power demand side response capacity will reach 3% to 5% of the maximum power load. The development of demand response has been promoted to an important aspect of the overall energy system construction, which has never appeared in previous energy five-year plan reports.

Compared with the construction and transformation of flexible power sources, demand response has the characteristics of low investment and quick results, but a sound system and mechanism is the primary condition to encourage user participation. The new version of the "two rules" issued by the southern region and the Guangdong Province's market-oriented demand response rules provide us with a good reference.

2. The Southern Region takes a two-pronged approach to solve the demand response problem

In order to give full play to the role of demand response, various regions have successively introduced demand response compensation or market-based mechanisms. Among them, the Southern Power Grid region has adopted a combination of fixed compensation and market-based transactions, providing an effective model for reference.

1. Demand response compensation mechanism under the new version of the “two detailed rules” in the southern region

In March this year, the Southern Energy Regulatory Bureau released a new version of the "Two Rules" (the Southern Region's "Electricity Grid Connection and Operation Management Implementation Rules" and the "Electricity Auxiliary Service Management Implementation Rules") (draft for comments), and at the same time established special grid connection management and ancillary service implementation rules for wind power, photovoltaics, new energy storage, and adjustable loads.

Among them, the "Implementation Rules for the Management of Grid Connection and Ancillary Services of Adjustable Loads" clearly states that directly controlled adjustable loads (with direct control conditions and automatic power control capabilities of power dispatching agencies, not less than 30MW, maximum adjustment capacity not less than 10MW, and adjustment time not less than 1 hour) can participate in auxiliary services such as frequency regulation and peak regulation (including valley filling and peak shaving). The compensation standards for participating in frequency regulation auxiliary services refer to other grid-connected entities; when participating in peak shaving auxiliary service compensation, the compensation standards for participating in valley filling auxiliary services are the same as those for new energy storage, and enjoy the second tier (30%-40%) compensation standards, which are much higher than the first tier (0.792 yuan/kWh in Guangdong). For demand response to participate in peak shaving services, the standards are even higher, twice the second tier peak shaving standards, so as to give full play to the role of demand response in reducing peak loads.

In terms of the design of compensation and sharing mechanism, the compensation costs of power auxiliary services (covering auxiliary service varieties other than ramping) serving the overall operation of the power system shall be shared by the grid-connected entities such as the power generation side and the market-oriented power users. The current tentative proportion is 50% for the market-oriented power users. At the same time, it is required that "the peak-shaving (peak-cutting) compensation costs for the participation of directly controlled adjustable loads shall be fully shared by market-oriented power users", that is, the peak-shaving compensation costs for directly controlled loads can only be digested on the user side, which is equivalent to putting a "catfish" on the user side, increasing the game on the load side. If the market-oriented users do not increase their own adjustment capabilities, they may share more auxiliary service costs.

2. Guangdong Province establishes a multi-level market mechanism in response to market demand

On April 16, the Guangdong Power Exchange issued the "Implementation Rules for Market-based Demand Response in Guangdong Province (Trial)", establishing a market-based demand response compensation mechanism, introducing load aggregators with resource aggregation management capabilities, broadening the scope of implementation of electricity demand response, and gradually forming a response capability of 5% of the annual maximum electricity load, giving play to the role of demand-side resources in peak shaving and valley filling, promoting electricity supply and demand balance, and adapting to the operation of new energy power.

Compared with the "Two Rules", in addition to introducing a market competition mechanism, market-based transactions have the following characteristics: First, it has greatly expanded the scope of responders to include non-directly controlled virtual power plants larger than 0.3MW; second, it mainly targets the peak-shaving effect of demand response, reflecting the role of demand response in improving power system security and reducing power system investment. The upper limit of the price standard is significantly higher than the compensation standard of the "Two Rules"; third, it sets up market matching at three levels: multi-month (half a year or year), week, and day, forming a multi-mode settlement method based on capacity, response power, etc., which not only establishes a long-term and stable income method to promote the investment in demand response, but also encourages the full action of demand response resources through real-time bidding.

1. Market players

Market players include load aggregators and electricity users. Load aggregators refer to entities that manage and operate various response resources in a certain area in a unified manner, aggregate response resources to participate in demand response transactions, and include power sales companies and third-party independent entity aggregators. Electricity users include users who purchase electricity directly from the market and users who purchase electricity through power grid companies, and can also be divided into large users and general users. At this stage, the entry threshold for large users is temporarily set at an annual electricity consumption of 5 million kWh or more.

Response resources refer to resources with load regulation capabilities that are directly under large users or acted as agents by load aggregators, including traditional high-energy industrial loads, industrial and commercial interruptible loads, user-side energy storage, electric vehicle charging facilities, distributed power generation, smart power facilities, etc. Load aggregators or large users aggregate to form virtual power plants according to the regions to which response resources belong and whether they have direct control capabilities, and participate in demand response transactions. Virtual power plants are divided into direct-controlled virtual power plants and non-direct-controlled virtual power plants according to whether they have direct control conditions of the dispatch center.