Providing competitive ancillary services through efficient market structures

Most electric companies are facing structural changes due to increasing economic pressure towards deregulation and creation of power markets. One of the most critical issues still remaining open in this context is providing ancillary services competitively. The main focus of the paper is the implementation of a framework for the valuation of ancillary services that market participants are selling or buying, so that the optimal prices at which each service is exchanged will be more easily agreed by the parties. The quantifying method proposed in the paper is based on the relationship between the availability (the use) of the generic ancillary service and the state (the transition) the system is presently experimenting. The efficacy of the method is tested with reference to different active power services, given by spinning reserve and frequency regulation.