Real-Power Ancillary Services Supply in Competitive Electricity Markets

The electricity industry is undergoing a structural reform that gives new roles to new operators created from the unbundling of traditionally integrated electric utilities. This is the case of most European countries facing the implementation of the EU Directive 96/92/EC the has liberalised the generation market and has forced to restructure their electricity industry. The ISO is clearly the kernel of the industry and the rules implemented for the despatching of generation plants has a deep influence on the efficiency of the market . The paper aims at identifying the ancillary services required to operate an electricity system. Having them clearly identified, the work looks at how far competition can be pushed in real power ancillary services supply, without being exposed to inefficient behaviours aimed at exploiting market power. An integrated (energy-spinning reserve) market is proposed and an economic criterion based on the shadow price of generation has been applied to remunerate reserve capacity when grid stability requires a re-dispatch of economic merit order. The proposed approach is finally tested in a simulated case study.