1. Background Introduction
In order to achieve carbon peaking and carbon neutrality goals, China is building a new power system, and the gradual increase in the proportion of new energy is an important feature of the development of the new power system. However, the short-term large fluctuations in the output of new energy require the grid to allocate a large amount of flexible ramping adjustment resources. At the same time, the strong randomness and uncontrollability of new energy output cause the grid balance point to change suddenly and float indefinitely, requiring analysis of the forecast error of net load and additional reservation of sufficient ramping demand. Traditional ancillary services mainly include frequency regulation, reserve, and peak shaving, which cannot cover the contribution of flexible ramping resources that follow load peaks and valleys above the baseline load rate. Therefore, the ramp assistance service market has emerged. Internationally, some countries including the United States and the United Kingdom have actively explored the construction of ramp assistance service markets and have gained certain advanced experience. Currently, the Midwest Independent System Operator (MISO) and the California Independent System Operator (CAISO) in the United States, as well as the National Grid Electricity System Operator in the United Kingdom, have procured ramping products through market-based approaches.
The Smart Energy Research Group at Tsinghua University has been exploring the mechanism of ramp assistance service markets since 2016 and has published a series of research results, including an overview of the market mechanism for ramp assistance services and the analysis of optimal bidding decisions and market equilibrium of power market participants considering ramp assistance services. For specific research content, please refer to the third part of this article.
In December 2021, the National Energy Administration issued the "Management Measures for Power Ancillary Services," proposing the addition of new types of ancillary services such as ramping, reserve, and rotational inertia to cope with the impact of fluctuations in new energy output and weak inertia systems such as wind and solar on grid operation. This marks the beginning of China's power market incorporating ramp assistance services. On August 8, 2023, the Shandong Regulatory Office of the National Energy Administration issued a notice soliciting opinions on the "Draft Trading Rules for Shandong Power Ramp Assistance Service Market" (please click "Read Original Article" at the end of the text for details), marking the official release of the draft soliciting opinions for the first domestic ramp assistance service market trading rules. As ramp assistance services are still a new product in the domestic market, this article attempts to interpret these rules.
2. Rule Interpretation
This report provides an introduction to the key points of the "Shandong Electric Power Ramp Assistance Service Market Trading Rules (Draft for Solicitation of Comments)" (hereinafter referred to as the "Rules") that were released. It also discusses some of the issues that have received widespread attention.
2.1 Overview of the Rules
（1）What is Ramp Service?
Ramp assistance service refers to the service provided by grid-connected entities with strong load adjustment rates in response to short-term and significant changes in system net load caused by uncertainties such as fluctuations in renewable energy generation. These entities adjust their output based on dispatch instructions to maintain system power balance. Ramp assistance services are divided into two categories: upward ramp and downward ramp, and the two products are traded and priced separately.
（2）Who are the Market Participants?
Market participants include ramp assistance service providers, ramp assistance service fee payers, and market operation institutions.
Ramp assistance service providers include: (1) grid-connected public power generation units directly dispatched by the provincial-level power dispatching agency, including power generation units with a single capacity of 100MW or more, but excluding pumped storage power stations; (2) independent energy storage; (3) independent auxiliary service providers.
Ramp assistance service fee payers include: (1) grid-connected public power generation units directly dispatched by the provincial dispatching agency that do not provide ramp services; (2) centrally managed wind and photovoltaic power stations.
Market operation institutions include: dispatching agencies and trading institutions, with the following division of responsibilities: (1) dispatching agencies are responsible for the construction, operation, and management of the ramp assistance service market, market balance, organization and market clearance, cost assessment, and settlement; (2) trading institutions are responsible for the construction, operation, and management of the power trading platform, monitoring market operation, implementing
（3）How is the Market Organized?
In terms of trading scale, the ramp assistance service in these rules is conducted on a daily and intra-day basis, with a trading period of every 15 minutes. Currently, only intra-day trading is conducted. In terms of declaration methods, market entities that provide ramp services only need to declare the ramp service rate in the intra-day market, without separately quoting the ramp assistance service price. Instead, the price is determined based on the opportunity cost of market operation. In terms of clearance methods, the process is similar to the real-time electricity market, where ramp assistance services are jointly cleared with the real-time electricity market, generating a clearance price and quantity. In terms of pricing models, ramp assistance services have two sets of prices: upward ramp price and downward ramp price, which are determined by the Lagrange multiplier (shadow price) constrained by the system's upward/downward ramp demand in each time period.
（4）How are Costs Settled and Shared?
For market entities that provide ramp services, the cost they receive is the cumulative product of the awarded capacity and ramp clearance price over time. Market operation institutions will calculate and settle the costs on a daily basis and settle them monthly. The cost of ramp services is shared among the directly dispatched public power generation units, wind farms, and photovoltaic power stations that do not provide ramp services, based on the proportion of their grid-connected electricity generation on that day.
（5）How is Information Disclosed?
Regarding the disclosure of information about the ramp assistance service market, it is mainly divided into three types of information. Public information includes laws and regulations, policy documents, market rules, registration changes, market clearance results, and prices, etc. Public information includes basic information of market entities, service demands, etc. Private information includes awarded capacity, time periods, costs, etc.
（6）Market Intervention Measures
The Shandong Energy Regulatory Office is responsible for supervising and managing the implementation of the ramp assistance service market trading. Market intervention measures may be triggered in the following situations: serious disruption of market order, such as market entities abusing market power or serious breaches of contract; abnormal changes in market costs affecting normal market operation; major adjustments to electricity policies or trading rules. The main market intervention measures include: adjusting market access or exit conditions, including canceling or restoring market entity permissions; adjusting trading time, declaration, clearance processes, etc.; adjusting trading results; suspending market trading, etc.
2.2 Key Points Interpretation
(1) In the Shandong power ramp assistance service market, which new entities are allowed to participate?
The Shandong power ramp assistance service market allows new entities such as energy storage and independent auxiliary service providers (similar to adjustable loads such as virtual power plants and other adjustable resource aggregations) to participate. In comparison, the US MISO ramp assistance service market is more conservative, with admission not including energy storage and demand response resources; the CAISO ramp assistance service market considers economic factors more, and its market rules are more aggressive, allowing entities such as power generators, energy storage, power retailers, or electricity users to participate in the ramp assistance service market as long as they meet the admission criteria.
(2) Why does this rule allow independent energy storage to participate in the market, but pumped storage with stronger regulation capacity is not included in the market?
Currently, domestic pumped storage power stations and hydropower stations are generally operated as scheduled dispatch units and do not participate in the power market. According to the National Development and Reform Commission's "Opinions on Further Improving the Pricing Mechanism for Pumped Storage" (NDRC Price [2021] No. 633), a two-part pricing mechanism of "capacity + electricity" for pumped storage is to be established starting in 2023, with the electricity price part mainly formed through the spot market. Therefore, when the market operation matures, pumped storage power stations may also be able to participate in the market.
(3) In addition to the ramp assistance service market, what other types of transactions can independent energy storage participate in the power market in Shandong Province?
According to the "Regulations," independent energy storage can participate in the energy market and frequency regulation ancillary service market. However, for various reasons, there are still few records of independent energy storage participating in the frequency regulation market. Currently, the revenue of energy storage in the power market in Shandong Province mainly comes from the price difference in the energy market.
(4) How does the time scale of the upcoming ramp assistance service market compare to other international markets?
The Shandong power ramp assistance service market currently only operates and trades intraday, with a 15-minute trading time scale. In comparison, MISO conducts day-ahead (1 hour) and real-time (5 minutes) market transactions. CAISO conducts day-ahead (15 minutes) and real-time (5 minutes) market transactions. It can be seen that the trading time scale of the Shandong power ramp assistance service market (intraday) is smaller than that of the MISO and CAISO markets, so its response to fluctuations in net load should be stronger. However, the intraday market time scale in various parts of China is generally 15 minutes, so it is reasonable for the ramp assistance service market to have a 15-minute clearance time scale.
(5) What is the clearance relationship between ramp assistance service and energy trading?
This plan adopts a joint clearance mode for ramp assistance and energy markets, which is consistent with the clearance methods of CAISO and MISO in the United States. In fact, this plan adopts a joint clearance mode, which is quite different from the separate clearance mode commonly used in domestic ancillary service markets. Taking the Shanxi power market as an example, its energy market, frequency regulation market, and reserve market adopt a sequential clearance mode; taking the Shandong power market as an example, its energy market and frequency regulation market adopt a sequential clearance mode. Generally, in the early stages of market development, a sequential clearance method is usually adopted. Although this method is easy to start, it is often difficult to achieve the optimal allocation of market participants among various market products, which is not conducive to maximizing social welfare. In contrast, the joint clearance mode, although posing greater challenges to market clearance, can more effectively leverage the value of different resources and enhance overall social welfare.
(6) What is the pricing and pricing method for the ramp assistance service market?
Different from other auxiliary service products (frequency regulation, standby), the "Regulations" stipulate that the participating entities in the ramp market only need to declare the ramp service rate, and do not separately quote the ramp assistance service. In terms of clearance price, the clearance price of the ramp assistance service is obtained based on the Lagrange multiplier (shadow price) of the up and down ramp constraints of the joint clearance model. This is similar to the ramp assistance service market rules of the MISO and CAISO markets in the United States, where only the participating entities need to declare their intentions without quoting prices. In this model, the market organizer will determine the price of the cleared product based on the opportunity cost (the loss of income from participating in other markets due to participating in the ramp market). Compared to the self-quoting method of other auxiliary service products, the shadow price model is more suitable for the characteristics of ramp assistance services, and can reduce the possibility of market disorderly behavior, thereby improving the efficiency of the power market operation.
(7) How will the revenue of the ramp assistance service market entities be confirmed?
According to the "Regulations," the entities providing ramp assistance services will receive capacity revenue, minus assessment costs (if any). The capacity revenue is obtained by multiplying the bid capacity and clearance price of the entities in each time period and accumulating it; the assessment cost is an assessment of the ramp output deviation for the capacity that the market entities ultimately did not provide, specifically, in 15-minute intervals, and collecting assessment costs. Depending on the unit capacity, the allowable deviation is from 0.5% to 2% of the planned output.
It can be seen that the revenue of the ramp assistance service market entities in this market is different from the ramp assistance service market rules of MISO and CAISO in the United States. In the MISO and CAISO markets, in addition to capacity revenue, there is also energy revenue, which corresponds to the ramp capacity called in the real-time market, providing the corresponding fee for the real-time energy market. However, to avoid cross-subsidization, both markets stipulate that for the portion of the ramp capacity called in real-time operation of the unit, only the energy service fee is provided (no longer the ramp capacity fee), and for the portion of the ramp capacity not called in real-time operation, the ramp capacity fee is provided.
(8) Are the costs of the ramp assistance service market only shared by the generation side, and does the consumption side participate in the sharing? What are the specific sharing principles?
The current "Regulations" stipulate that the costs of the ramp assistance service are only shared by the generation side that did not provide ramp services (common generating units, wind, solar, etc.), and there is no participation from the demand side. In fact, the demand side is also a major factor in causing ramp costs and the beneficiary of system stability. According to the principle of "who benefits, who bears," the additional costs of ramp services should be to some extent passed on to the user side. The ramp cost in the MISO and CAISO markets is shared by both the generation and consumption sides, which may be the direction for the development of the ramp assistance service market in China. The "Regulations" stipulate that the sharing ratio of the additional costs of each unit is determined based on the unit's daily online amount. In the author's opinion, this still needs further discussion. Some units have a high online power but do not bring a large ramp demand (such as nuclear power and power sources with small fluctuations throughout the day). If the calculation is based on the online power rather than the ramp contribution rate, it contradicts the principle of "who benefits, who bears."
(9) At the current stage, what challenges will independent energy storage face when participating in ramp assistance services?
Energy storage participating in the ramp market needs to accurately estimate the state of charge (SOC) at the time of submitting the bid, because the SOC of the energy storage directly affects its service capacity and effectiveness in the market. If the estimation is inaccurate, it may lead to the energy storage not being able to provide the required ramp service as expected in actual operation, and may face issues with assessment and compensation. Therefore, energy storage systems need reliable SOC estimation methods and technologies to ensure the accuracy of their participation and operation in the market.
Due to the unique flexibility of energy storage systems in the power market, in order to avoid the impact of accurate SOC declaration and strict assessment mechanisms on the enthusiasm of energy storage to participate in the market, a more customized assessment mechanism may be needed, such as gradually adjusting the requirements for initial SOC declaration, or allowing energy storage systems to adjust the SOC within a certain range. Discussing the establishment of some reward mechanisms to encourage energy storage systems to accurately declare the initial SOC, to ensure that they can fully leverage their advantages in the market.
3. Academic Sharing
Since 2016, the smart energy research group at Tsinghua University has conducted a series of studies on ramp assistance services in the electricity market, and has produced a series of results (see below). Among them, reference [1] comprehensively discusses the definition, market equilibrium model, and transaction mechanism design of ramp assistance services, summarizes the research status of ramp assistance services, and looks forward to future research directions. References [2,3] propose a multi-period Nash-Cournot equilibrium model for the joint operation of flexible ramping market and energy market proposed by MISO and CAISO in the United States, optimizing the energy market and ramping market jointly to explore the impact of ramping products on market prices, unit output, and renewable energy integration. Reference [4] aims to explore the potential of energy storage systems as excellent flexibility resources. Under the framework of coordinated optimization of the energy market and ramping service market, it proposes an optimal bidding strategy for energy storage systems.
[1] Guo, H., Chen, Q., Xia, Q., & Zou, P. (2017). Flexible regulation services in the electricity market: basic concepts, equilibrium models, and research directions. Chinese Journal of Electrical Engineering, 37(11), 3057-3066+3361.
DOI :
https://doi.org/10.13334/j.0258-8013.pcsee.162369
Abstract:
In recent years, the penetration rate of renewable energy such as wind power and photovoltaics has been continuously increasing, and the uncertainty of their power generation has brought significant pressure to the operation of the power system. The large amount of random fluctuations and the anti-peak output of renewable energy make the shortage of flexible adjustment resources more serious, leading to large-scale wind and solar curtailment. Based on this, the variety of flexible adjustment services and the corresponding market operation mechanism have emerged. How to define flexible adjustment services and organize the trading mechanism of flexible adjustment services has become a hot topic of concern in both academia and industry. Therefore, this paper first introduces the basic concept of flexible adjustment services, and compares and analyzes the differences between flexible adjustment services and traditional ancillary services. Secondly, it carefully analyzes the components of flexible adjustment services, and organizes the development and application of flexible adjustment services. Thirdly, a market equilibrium model considering flexible adjustment services is provided. Finally, a review of the current research status and progress of flexible adjustment services is given, and the future research direction of flexible adjustment services is prospected.
[2] Qixin Chen, Peng Zou, Chenye Wu, Junliu Zhang, Ming Li, Qing Xia, and Chongqing Kang. "A Nash-Cournot approach to assessing flexible ramping products." Applied energy 206 (2017): 42-50.
DOI :
https://doi.org/10.1016/j.apenergy.2017.08.031
Abstract:
With the increasing penetration of renewable energy in the power system under stricter energy and environmental constraints, the impact on the electricity market is intensifying. In order to handle the uncertainty of renewable energy generation and provide transparent economic incentives for flexible resources, the California Independent System Operator (CAISO) and the Midcontinent Independent System Operator (MISO) have proposed a bid-based flexible ramping product market. In order to study the impact of these new products on market equilibrium, this paper proposes a multi-period Nash-Cournot equilibrium model and establishes a bi-level optimization model, using the Gauss-Seidel iteration method to obtain equilibrium. In addition, a framework for the coordinated optimization of energy and flexible ramping products is established, considering different types of generators, including thermal generators, hydro generators, renewable energy generators, and energy storage systems, to simulate different generator combinations. Two cases, one primarily based on solar energy and the other on wind energy, are compared to demonstrate the impact of flexible ramping products on market prices, generator output, and the integration of renewable energy. Simulation results show that after the introduction of new products: energy prices will increase slightly; more highly variable renewable energy can be integrated; generator output will change; and more generators should come online to provide flexible services, etc.
[3] Peng Zou, Qixin Chen, Jianxiao Wang, Qing Xia, Chongqing Kang, Peiran Shi, and Jun Liu. "Evaluating the impacts of flexible ramping products on the market equilibrium." In 2016 IEEE Power and Energy Society General Meeting (PESGM), pp. 1-5. IEEE, 2016.
DOI :
10.1109/PESGM.2016.7741483
Abstract:
Flexible ramping products are bid-based products recently proposed in the CAISO and MISO markets, aiming to provide transparent economic incentives for flexible resources in the increasingly high penetration of renewable energy. In order to evaluate the impact of flexible ramping products on market equilibrium, a multi-period Nash-Cournot equilibrium model is established, and the profit maximization problems of multiple entities are transformed into an integrated single-level optimization model based on the potential function method. In addition, through numerical calculations and comparisons of several cases, the impact of ramping products on energy prices and the integration of renewable energy is demonstrated.
[4] Wentao Liu, Hongye Guo, Jialong Li, Yuguo Chen, and Qixin Chen. "Optimal bidding strategy for energy storage systems in energy and flexible ramping products markets." In 2016 IEEE Innovative Smart Grid Technologies-Asia (ISGT-Asia), pp. 776-780. IEEE, 2016.
DOI:
10.1109/ISGT-Asia.2016.7796483
Abstract:
With the increasing penetration of renewable energy in the power system, the operational issues caused by the uncertainty of renewable energy generation are becoming more serious, and the use of flexible services can alleviate these issues. In order to economically incentivize investors to provide flexible services, the CAISO and MISO markets have proposed a flexible ramping product market. Due to its flexible power output capability, energy storage systems have great potential in providing flexible services. In order to maximize the profit of energy storage systems from the coordinated optimization of energy and flexible ramping product markets, this paper proposes the optimal bidding strategy for energy storage systems. We establish three cases to test its efficiency and adaptability, including only the energy market, the coordinated optimization of the energy market with a relatively higher flexible ramping product price market, and the coordinated optimization of the energy market with a relatively lower flexible ramping product price market. The performance of energy storage systems in different scenarios is compared.
About the Authors
Dr. Chen Qixin is a distinguished tenured professor and doctoral supervisor at the Department of Electrical Engineering, Tsinghua University. He also serves as the vice dean of the Energy Internet Research Institute, Tsinghua University. He is a renowned Yangtze River Scholar and an IET Fellow.
Dr. Chen is a leading expert in the power market, energy internet, and power system operation. He is a member of the Power Market Expert Group of the National Energy Administration, the vice chairman of the Power Technology and Economics Branch of the China Society of Technical and Economic, and the vice chairman of the Power Market and Carbon Market Special Committee of the China Energy Research Society.
Dr. Chen has received prestigious awards such as the Young Scientist by the World Economic Forum, MIT TR 35, and Elsevier Asia-Pacific Young Scientist. He has authored three monographs and nearly 200 scholarly papers. He has also won more than 10 provincial and ministerial level scientific and technological awards, and has been entrusted with more than 50 research projects by the National Energy Administration, the National Natural Science Foundation of China, the World Bank, and other organizations.
Dr. Guo Hongye is a distinguished assistant researcher at Tsinghua University’s Department of Electrical Engineering and serves as the director of the Trading Platform Research Laboratory within the Energy Internet Research Institute. His expertise lies in the power market and the advancement of smart electricity usage.
Dr. Guo has successfully led a project funded by the National Natural Science Foundation of China’s Youth Fund and a Postdoctoral Fund project. His exceptional work has earned him recognition through the Beijing Association for Science and Technology’s Youth Lift-off Program and the prestigious Shui Mu Tsinghua Scholar Program.
Supported by the United Nations’ YSEH initiative for sustainable energy among youth, Dr. Guo has been honored with Tsinghua University’s Outstanding Doctoral Dissertation and Outstanding Postdoctoral Fellow awards. He has contributed to five significant NSFC-funded projects and key R&D projects under the Ministry of Science and Technology. Additionally, he has been involved in five projects focused on the construction of power markets, commissioned by authoritative bodies like the National Development and Reform Commission and the National Energy Administration.
Dr. Guo’s research has led to over 30 scholarly publications, with 12 SCI-indexed papers and six EI-indexed papers where he is the lead author. He has also authored an English monograph and holds 11 patents to his name, showcasing his innovative contributions to the field of electrical engineering.
Wu Kailang is an assistant researcher at the Energy Internet Research Institute, Tsinghua University. His primary research areas include the design of electricity market mechanisms and the low-carbon optimization operation of integrated energy systems. As a key researcher, he has participated in numerous large-scale interdisciplinary research projects and has provided decision support for government and corporate entities.
