As India takes giant strides in the integration of renewable energy in the grid mix, in addition to a big market for renewable energy developers and service providers a new market for ancillary services becomes vibrant. If current projections hold true, from a market of over 250GW of power with nearly 13% of renewable energy, India will achieve a renewable energy target of 40% by 2030. The projected growth will require a whole new level of electricity services moving from just a market for power trading to a market of electricity services, capacity market, and demand management. If the vision statement of the current Indian government ‘One Nation, One Grid, One Price’ is to be realised, the development of ancillary services is as crucial as the development of power infrastructure and projects.
Ancillary Services in India
India dint really miss the lack of structured ancillary services in the electricity grid until the blackout in 2012. The blackout portrayed the network operator in a bad light. The situation which turned out to be demand/supply mismatch is what primarily constitutes the genesis of ancillary services. The situation was just before the time when the southern grid was integrated to the NEW grid.
The Indian ancillary market revolves around the operation of powergrid who in turn control the Regional Load Dispatch Centres (RLDC). The RLDC along with their state counterparts coordinate on a daily basis with all the power generating companies in forecasting and scheduling the demand/supply. The required ancillary services are mostly provided by the vertically integrated utilities. The Automatic Generation Control is still in its nascent stages and hence India traditionally relies on Frequency Controlled Ancillary Services (FCAS) and Voltage Control Ancillary Services (VCAS) for grid operation.
The Central Electricity Regulatory Commission didn’t have a regulatory framework for ancillary services until recently which evolved from what was called a ‘Staff paper on introduction of ancillary services in Indian electricity market. The Ancillary Services Operation Regulations which came into effect in 2015 defines the guidelines for participation in Reserves Regulation Ancillary Services (RRAS). The RRAS is the first of the ancillary services which reigns in the grid frequency within operational limits by calling on participants to increase/decrease generation.
Although Reserves Regulation Ancillary Services (RRAS) looks to define the scope for solving the key problem in an electricity network, it is just the beginning. The services are typically referred to as balancing services around the world. Balancing frequency alone could be achieved in a multitude of ways, for e.g. UK regulates frequency balancing through five different approaches ranging from mandatory frequency response to enhanced frequency response with each one of them differing in terms of contract regulations and response times. Drawing comparisons between two different economies is not always plausible but policy drivers in the electricity sector have for long been adapted from the developed world. It will only prepare the policy makers, regulators and the industry to anticipate change and deliver on time.
The ancillary services have evolved from a market which called for increase/decrease of power by turning off loads or turning on the power plants. Emerging technologies are increasingly becoming indispensable in terms of operation within this market space. Energy storage systems including pumped storage or battery technologies have proven to provide significant benefits to the developers and utilities. Ancillary services in UK is increasingly being provided by the new age entrepreneurial ventures who are trying to integrate big data, smart meters & devices, smart grids and energy storage technologies into the market which is currently valued at over £1Bn a year. Nearly half of the market has been evolved by policy options of the national grid which has brought in new players with interesting solutions into the electricity grid. The requirement sought from players in each sector of frequency response has ensured each service provider has developed a niche technology and service scope to deliver the particular requirement. The market is clearly demarcated in terms of the capacity under offer, response time and asset owners/clients under control. For example, a company like Flexitricity has evolved from being just a frequency service provider to offering unique services like footroom which incentivises participants to consume more when there is excess of wind energy in the grid.
Ancillary services in Indian market will take time to reach the diversification as seen in an UK market but it brings along its own opportunities. India will witness technological adoption in this sector faster in comparison owing to the availability of technology and the declining cost of technologies. The market in UK has been operational for a long time but the smart meter rollout plan has just begun which in contrast to India will witness smart meter rollouts before the ancillary service market reaches a maturity. The proposition could provide a unique opportunity for domestic and small scale industrial consumers who have been adopting rooftop solar in a big way which when coupled with smart meters and devices will be an interesting proposition to offer domestic scale demand reduction services. UK, however offers an example of how policies in this sector have to evolve, it has seamlessly integrated companies who offered services in the traditional large scale route and then sought services that could be possibly offered by small scale providers and start-ups with certain services being sought well in advance thereby allowing companies to plan in advance. Overall, I believe multi nationals and traditional players will fancy a pie in the ancillary markets in the long run and a mix of competitive markets and energy supplier services will be key factors. The market will truly open up when the proposed privatisation of distribution is achieved to an extent and when there are a few pilot projects that are up and running. Technological solutions in terms of hardware devices and software will deliver the requirement but like in any power sector reform unless there are favourable policies and regulations at the right time the true potential will not be realised.
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