Ancillary-service details: operating reserves

Abstract

Operating reserves are the front lines in the defense of bulk-power systems against major generation and transmission outages. Operating reserves are provided by generating units that can increase their output rapidly to restore the system to generation/load balance after a major disturbance occurs. Dramatic changes are under way in the U.S. electricity sector, in particular the unbundling of generation from transmission and the increasingly competitive nature of bulk-power markets. Therefore, it is important to revisit the industry`s definitions of, procurement of, and payment for operating reserves. The procedures traditionally used by vertically integrated utilities may not serve the needs of an increasingly fragmented and competitive electricity industry. This report examines the past and current functions of, as well as the national and regional requirements for, operating reserves. We examine the data and analysis that support minimum-operating-reserve requirements. We obtained data on the number and severity of generator outages for three large U.S. electrical systems, including a power pool, a regional reliability council, and a utility. These limited data sets show a range of 15 to 40 major (>500 MW) outages a year for systems ranging in size from 20, 000 MW to 48,000 MW of peak demand. Finally, we discuss several emerging issues related to the underlying technical support for minimum operating-reserve requirements, alternative ways to pay for these reserves, the data needed to support the analysis of these requirements, and the mix of functions that are currently included within operating reserves.