The Directive 2009/72/EC defined ancillary service as 'a service necessary for the operation of a transmission or distribution system.'

         
          
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23 July 2021

Characterization of TSO and DSO Grid System Services and TSO-DSO Basic Coordination Mechanisms in the Current Decarbonization Context, Silva, R.; Alves, E.; Ferreira, R.; Villar, J.; Gouveia, C., Energies, 2021,14,4451, https://doi.org/10.3390/en14154451

 

 

Legislative Proposal for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast) of 30 November 2016 (COM(2016) 864 final 2016/0380 (COD) - the element of the documentation known as the ‘Winter Energy Package’) added to the above legal definition the following words: 'including balancing and non-frequency ancillary services but not congestion management'.

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Article 2(48) of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast)

 

‘ancillary service’ means a service necessary for the operation of a transmission or distribution system, including balancing and non-frequency ancillary services, but not including congestion management

 

 

This amendment has been included in the reworded definition of the ‘ancillary service’ in Article 2(48) in the final text of the recast Electricity Directive (Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity).

 

The definition of the 'non-frequency ancillary service' was, moreover, proposed by the European Commission’s Winter Energy Package to be included in the said Directive ('a service used by a transmission or distribution system operator for steady state voltage control, fast reactive current injections, inertia and black start capability').

 

The final text of the recast Directive in Article 2(49) ultimately adopted in this regard the following definition: ‘non-frequency ancillary service’ means ‘a service used by a transmission system operator or distribution system operator for steady state voltage control, fast reactive current injections, inertia for local grid stability, short-circuit current, black start capability and island operation capability’.

 

Ancillary services according to the recast Electricity Directive form an integral part of electricity markets (Article 2(9): ‘electricity markets’ are markets for electricity, including over-the-counter markets and electricity exchanges, markets for the trading of energy, capacity, balancing and ancillary services in all timeframes, including forward, day-ahead and intraday markets).

 

Ancillary services according to the ACER's Framework Guidelines on Electricity System Operation (FG-2011-E-003) of 2 December 2011 mean services necessary to support transmission of electric power between generation and load, maintaining a satisfactory level of operational security and with a satisfactory quality of supply. 

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Competition Policy and an Internal Energy Market, Study for the European Parliament's Committee on Economic and Monetary Affairs (IP/A/ECON/2016-10, p. 58, 59).

The purchase of ancillary services is an important aspect of balancing: Various BRPs are contracted by TSOs to deliver services ‘necessary for the operation of a transmission or distribution system', which encompass, for instance, the ability to restart a grid following a blackout (black start capability), the ability to maintain system frequency with automatic and very fast responses (frequency response) and a fast reserve providing additional energy when needed.

The aim of contracting these services is to guarantee system security.

Although traditionally ancillary services have been delivered by big (conventional) generation units connected at transmission level, the broad range of services to the TSOs can potentially be delivered by many providers: RES are expected to play an important role and new actors, such as aggregators are expected to compete with traditional providers, by offering flexibility from the demand side or other Distributed Energy Resources (DER).

The markets for ancillary services are still very national.

Despite the fulfilment of several minimum requirements established by ENTSO-E, ancillary services and their mechanisms are freely defined by each country, resulting in heterogeneity.

Whereas there is some similarity between countries regarding to frequency and voltage control services, the acceptance criteria for other ancillary services vary widely.

 

The EU Network Code on System Operation in Article 55(c) lists ancillary services among services provided by third parties, through procurement when applicable, that each Transmission System Operator (TSO) uses for ensuring the operational security of its control area.

 

Typical ancillary services procured by TSOs to ensure the management of the system divide into:

 

frequency ancillary services (balancing of the system), and

 

- non-frequency ancillary services (including, among others, voltage control and black-start capability).

 

In most cases, TSOs are mandated to do so by a general public service obligation to maintain system stability and security.

 

There are ancillary services which are obligatory and not remunerated, with requirements stipulated by network codes, while others are traded according to market rules.

 

Services for congestion management are sometimes also mentioned as part of ancillary services (TSO – DSO Report, an Integrated Approach to Active System Management with the focus on TSO – DSO Coordination in Congestion Management and Balancing, ENTSO-E, E.DSO, CEDEC, GEODE, EURELECTRIC, p. 5), but, as was indicated above, the definition in Article 2(58) of the recast Electricity Directive, excluded them from the scope.

 

Examples of ancillary services that TSOs can acquire from generators are electricity for the compensation of grid losses, regulating power and emergency power.

 

The main elements of ancillary services include active power reserves and reactive power reserves for balancing power and voltage control.

 

Active power reserves include automatically and manually activated reserves and are used to achieve instantaneous physical balance between generation and demand.

 

Further elements of ancillary services may include inertial response, trip to houseload, spinning reserve and islanding capability.

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Commission Staff Working Document of 30.11.2016 Accompanying the document Report from the Commission Final Report of the Sector Inquiry on Capacity Mechanisms {COM(2016) 752 final} SWD(2016) 385 final
, p. 52, 53


A particular area in which there may be debate about what constitutes a capacity mechanism and what requires State aid approval is in the specification and procurement of ancillary services.

TSOs typically procure frequency (balancing of the system) and non-frequency (voltage control and black-start) ancillary services to ensure the management of the system.

In most cases, they are mandated to do so by a general public service obligation to maintain system stability and security.

Where such ancillary services are procured independently by TSOs, and where in particular the determination of the precise volumes and types of services to be procured is left to the TSOs without Government involvement, there will be a strong indication that the purchase of such services does not involve State aid and that those services are therefore not covered by this inquiry.

Such indication will be strengthened when procurement of such services is performed in a transparent, competitive and non-discriminatory way, thereby excluding undue advantages.

Another element to distinguish ancillary services from capacity mechanisms is the use and purpose of the services: when they are used in small volumes relative to the overall level of capacity in the market and only to provide short term corrections to enable system security, they will more likely be considered ancillary services.

However, where ancillary services appear to be contracted at the request of governments and/or are used to ensure capacity is available to balance the system over longer periods, they can have the same effect as capacity mechanisms.

Such measures may merit attention from the Commission and require State aid approval. 


 

Legislative proposal included in the European Commission’s Winter Energy Package explicitly stated that ancillary services must not be treated as a capacity mechanism ('capacity mechanism' means an administrative measure to ensure the achievement of the desired level of security of supply by remunerating resources for their availability not including measures relating to ancillary services - Article 2(2)(u) of the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD)).

This exclusion has been upheld by Article 2(22) of the Regulation (EU) 2019/943 of the European Parliament and of the Council on the internal market for electricity (recast).

 

In the liberalised market, ancillary services are contracted by TSOs from selected grid users that qualify for providing these services.

 

The aforementioned Proposal for a Directive of 30 November 2016 literally expressed the rule that transmission system operators and distribution system operators when procuring ancillary services, must treat demand response providers, including independent aggregators, in a non-discriminatory manner (Article 17(2) of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast): “Member States shall ensure that transmission system operators and distribution system operators, when procuring ancillary services, treat market participants engaged in the aggregation of demand response in a non-discriminatory manner alongside producers on the basis of their technical capabilities”).

 

It is further developed in Article 40 of the said Proposal (Article 40(3) and (4)), which envisions that in performing the tasks of procuring ancillary services from market participants the transmission system operator must:

 

1. take into account the functions performed by the regional operational centres and cooperate as necessary with neighbouring transmission system operators, and


2. ensure that the procurement of balancing services and, unless justified by a cost-benefit analysis, non-frequency ancillary services, is:


(a) transparent, non-discriminatory and market-based;

 

(b) ensures effective participation of all market participants including renewable energy sources, demand response, energy storage facilities and aggregators, in particular by requiring regulatory authorities or transmission system operators in close cooperation with all market participants, to define technical modalities for participation in these markets on the basis of the technical requirements of these markets and the capabilities of all market participants.

 

The Supporting Document for the Network Code on Operational Planning and Scheduling of 26 March 2013 mentions ancillary services in the context of active power, reactive power and black start capability.

 

The first two ancillary services enable the TSO to operate a secure and reliable power system, whereas the last enables the TSO to reset the system after a fault (the matter of the emergency code).

 

In managing the transmission systems, the TSOs must be able to deal with unexpected changes of generation capacity, interconnector flows or system demand.

 

This is accomplished by maintaining a prudent level of active power ancillary services.

 

The responsibility is put on the TSOs to ensure the correct procurement and management systems are in place to ensure adequate/correct ancillary services.

 

There is the need to plan ahead to ensure the correct levels of active power ancillary services will be available once real time is reached.

 

Updates to this plan will be required for any significant network or generation changes that impact on operational security.

 

If when updating the plan a shortfall is detected, remedial action must be taken.

 

If a TSO finds itself in a shortfall position (after remedial actions have been investigated), communication and cooperation with neighbouring TSOs is a priority.