Reduced risks and improved economic operation of ancillary services

Present arrangements and regulation for ancillary services for power balance in power systems cannot cope with future developments in power systems as the participants do not receive proper incentives for required behaviour. This paper analyzes the consequences of current arrangements for system operation and stability when all participants make their own trade-off between risks and economic operation. Two-sided markets for ancillary services are proposed to replace the single-sided market of present secondary control arrangements and a price-based control strategy for power imbalances is described which can replace primary control. In contrast with present arrangements for primary control, all participants receive proper incentives such that economically rational behavior supports the global requirements on stability, reliability and minimal costs. Both new proposals guarantee a reliable and efficient operation of power systems in a market environment with responsive, reliable and accountable but also competing prosumers, a large penetration of renewables and continent spanning transmission networks.