Ancillary Services and Flexible Generation

Ancillary Services and Flexible Generation

Contents Ancillary Services Overview Types of Ancillary Services Market Impact Benefits of Medium Speed Solution Contact Information

What are Ancillary Services? Those services necessary to support the transmission of electric power from seller to purchaser given the obligations of control areas and transmitting utilities within those control areas to maintain reliable operations of the interconnected transmission system. ~ United States Federal Energy Regulatory Commission Ancillary services help support basic electrical services: Generating capacity Energy supply Power delivery Essential for reliability and for commercial transactions

Ancillary Services Usage Common examples of the need for ancillary services in the utility market include the following: Firm up renewable energy capacity (i.e. wind or solar) Increase in power demand Temporary out of service transmission Any imbalance in the electricity market

Options for Services Competitive services: Regulation Load following Energy imbalance Frequency response Spinning reserve Non-spinning reserve Supplemental reserve Blackstart Monopoly services: - System control - System blackstart Questionable services: - Voltage control - Reactive capability - Dynamic scheduling * Let s take a look in more detail at some of the more common competitive services

Regulation and Load Following Both address the time varying characteristic of balancing generation and load under normal operations The system only has to compensate for the aggregation Regulation is the most expensive ancillary service Typically need ~1.5% of capacity for regulation - ~1.0% in a very large BA like MISO or PJM Prices fluctuate hourly - Typically slightly higher at night Load following is provided by the short-term energy markets or the economic dispatch of the utilities generators Load following in general is closely tied to energy imbalance

Spinning, Non-Spinning, & Supplemental Reserves Spinning Additional power capacity available after increasing the output to the generators connecting to the grid Frequency responsive: fast, autonomous response Non-spinning Additional power capacity not connected to the grid which can be made available fully available in 10 minutes Supplemental Similar to non-spinning, but fully available in 30 minutes to 60 minutes

Ancillary Service Markets Run hourly Day-Ahead & Real-Time Are more volatile than energy markets Because they are based on energy opportunity costs Show seasonal, weekly, and daily patterns Because they are based on energy opportunity costs Typically take months to settle after introduction but then behave well

Time Scales for Ancillary Services Contingency Operations Replacement or Supplemental Reserve Non-Spinning Reserve Spinning Reserve Normal Operations Regulation Load Following or Energy Imbalance Voltage Control 0.1 1 10 100 TIME (MINUTES)

Pricing Example

Products for Ancillary Services

Reciprocating Engine Characteristics The following characteristics outline the benefits of medium speed engine technology for ancillary services: Operating Flexibility 3 minute starting time Zero startup cost MW/minute ramp rate Regulation (AGC) accuracy Minimum load % load on each engine Multi engine plant Cost Relatively low capital cost Excellent efficiency Excellent part load efficiency Emissions HFO, DFO, Natural gas, or Dual Fuel operation No water use Reduction through SCR/OxyCad s Installation speed Siting flexibility Transmission constraints Transmission alternative* Reactive power Synchronous condenser clutch? Black start Islanded operation

Value of Flexibility Energy, ancillary service, and fuel prices change hourly The optimal mix of services to sell changes hourly Don t just sell ancillary services with residual capability after energy has been sold Medium speed engines can reach full load and synchronize to the grid under 10 minutes to support hourly demand

Generation Operating Modes Sell full energy output Energy price exceeds production cost Sell regulation and/or spinning reserve when ever the unit is partially loaded from energy sales Energy market sold only part of the output Sell non-spin Production cost exceeds energy price

Caterpillar Contacts For more information about our products and ancillary services, please contact the following individuals: North American Sales Department: Claudio Martino Regional Sales Director, martino_claudio@cat.com Kason Davis Sales Manager, davis_kason_g@cat.com