A Cost-Based Approach to Elicit Ancillary Service Tariffs from Unified Capacity and Energy Tariffs

Year 2022, Volume: 10 Issue: 1, 53 - 63, 30.01.2022

Hikmet Sezer Ali Güven Osman Bülent Tör Mahmut Erkut Cebeci Saeed Teimourzadeh

https://doi.org/10.17694/bajece.711158

Abstract

Establishing separated markets for capacity, energy, and ancillary services (AS) is one of the key steps to liberalize electricity sector and realize electricity markets. This study aims at eliciting AS tariffs from unified capacity and energy tariffs through a cost-based approach. In the proposed framework, maintaining annual revenue requirements of the power plants are considered as the main objective while separating the AS tariff from unified tariffs. The conducted study considers two types of unified tariffs, i.e. capacity and energy tariffs, and offers proper AS eliciting scheme for each type of unified tariffs. The main challenges addressed here are: 1) incentivizing\penalizing AS provision more\less than scheduled amount which is tackled through an incentive factor, and 2) preventing overall tariff increment (customer tariff) after eliciting AS tariff which is addressed by applying fixing constraint to the overall tariff at before and after AS tariff eliciting conditions. Last but not the least, AS trade between adjacent utilities and calculating the benefits from this trade are addressed. The effectiveness of the proposed methodology is assured through numerical investigations.

Keywords

Ancillary Service, Balancing market, Frequency regulation, Capacity Tariff, Energy Tariff

Supporting Institution

This paper presents the scientific results of the transnational project “Multi-layer aggregator solutions to facilitate optimum demand response and grid flexibility” (SMART-MLA Project No: 89029 ), co-financed by TÜBİTAK (Turkey), SWEA (Sweden), EUDP (Denmark), UEFISCDI (Romania), and RCN (Norway) under ERA-Net Smart Energy Systems, SG+ 2017 Program. The study is supported by “TÜBİTAK TEYDEB 1509 - Uluslararası Sanayi Ar-Ge Projeleri” program with the project number of 9180003.

Project Number

“TÜBİTAK TEYDEB 1509 - Uluslararası Sanayi Ar-Ge Projeleri” program with the project number of 9180003.

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