settlements guide to ancillary services payment and recovery

34 Pages·2015·1.63 MB·English

SETTLEMENTS GUIDE TO ANCILLARY
SERVICES PAYMENT AND RECOVERY
PREPARED BY: Settlements
VERSION: 1.0
DATE: 17 November 2014
Final
SETTLEMENTS GUIDE TO ANCILLARY SERVICES PAYMENT AND RECOVERY

Disclaimer

(a) Purpose – This Guide has been produced by the Australian Energy Market Operator Limited (AEMO) to
provide information about Ancillary Services Payment and Recovery in the National Electricity Market, as at
the date of publication.

(b) No substitute – This Guide is not a substitute for, and should not be read in lieu of, the National Electricity
Law (NEL), the National Electricity Rules (Rules) or any other relevant laws, codes, rules, procedures or
policies. Further, the contents of this Guide do not constitute legal or business advice and should not be
relied on as a substitute for obtaining detailed advice about the NEL, the Rules, or any other relevant laws,
codes, rules, procedures or policies, or any aspect of the national electricity market or the electricity
industry.

(c) No Warranty – While AEMO has used due care and skill in the production of this Guide, neither AEMO, nor
any of its employees, agents and consultants make any representation or warranty as to the accuracy,
reliability, completeness or suitability for particular purposes of the information in this Guide.

(d) Limitation of liability - To the extent permitted by law, AEMO and its advisers, consultants and other
contributors to this Guide (or their respective associated companies, businesses, partners, directors, officers
or employees) shall not be liable for any errors, omissions, defects or misrepresentations in the information
contained in this Guide, or for any loss or damage suffered by persons who use or rely on such information
(including by reason of negligence, negligent misstatement or otherwise). If any law prohibits the exclusion
of such liability, AEMO’s liability is limited, at AEMO’s option, to the re-supply of the information, provided
that this limitation is permitted by law and is fair and reasonable.

© 2010 - All rights reserved.

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Contents
1 Introduction .............................................................................................................. 6
2 Market Ancillary Services ......................................................................................... 9
2.1 Regulation FCAS ..................................................................................................... 9
2.2 Contingency FCAS ................................................................................................... 9
2.3 FCAS Recovery ..................................................................................................... 10
2.4 Co-optimisation ...................................................................................................... 13
3 Non- Market Ancillary Services .............................................................................. 14
3.1 NSCAS and SRAS ................................................................................................. 14
3.2 NSCAS Payments .................................................................................................. 14
3.3 NSCAS Cost Recovery .......................................................................................... 14
3.4 SRAS Payments .................................................................................................... 15
3.5 SRAS Cost Recovery ............................................................................................. 15
3.6 Test Payment Recovery ......................................................................................... 16
4 Glossary of Terms .................................................................................................. 17
Appendix A Worked Examples .................................................................................................. 18
A.1 Frequency Control Ancillary Service (FCAS) – Contingency Recovery Calculations
(Raise 6 Sec) ......................................................................................................... 18
A.2 FCAS – Regulation Recovery Calculations (Regulation Raise) .............................. 20
A.3 NSCAS Recovery Calculations .............................................................................. 23
A.4 Calculating Total NSCAS Recovery ....................................................................... 24
A.5 SRAS Recovery Calculations ................................................................................. 25
Appendix B Data Tables ............................................................................................................ 26
Appendix C Ancillary Services Reporting in the Settlement Report............................................ 27
C.1 Market Ancillary Services Payment ........................................................................ 27
C.2 Market Ancillary Services Recovery ....................................................................... 27
4.1 Non- Market Ancillary Services Recovery ............................................................... 29
Appendix D Ancillary Services Reports on AEMO Website ....................................................... 30
Appendix E References ............................................................................................................. 34

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Figures
Figure 1 Non-Market Ancillary Service Summary .......................................................................... 7
Figure 2 Market Ancillary Service Summary .................................................................................. 7
Figure 3 Current AS Payment and Recovery Files ....................................................................... 30
Figure 4 Historical AS Payment and Recovery Files .................................................................... 30
Figure 5 Customer Recovery Rates ............................................................................................. 33
Figure 6 Generator Recovery Rates ............................................................................................. 33

Tables
Table 1 Ancillary Service Payment Summary ........................................................................ 8
Table 2 Ancillary Service Recovery Summary ....................................................................... 8
Table 3 Regional Constraint Information ............................................................................. 18
Table 4 Participant Generator Energy Data ......................................................................... 18
Table 5 Regulation Constraint Information .......................................................................... 20
Table 6 Customer Energy Consumption ............................................................................. 20
Table 7 Total Energy by Requirement Region ..................................................................... 21
Table 8 MPF and Recovery Calculations ............................................................................ 21
Table 9 Residual MPF and Recovery Calculations .............................................................. 22
Table 10 Information for Loadshed Recovery Calculation ..................................................... 23
Table 11 Information for Reactive Power Recovery Calculation ............................................ 24
Table 12 Information for SRAS Customer Recovery Calculation ........................................... 25
Table 13 Information for SRAS Generator Recovery Calculation .......................................... 25
Table 14 Data Tables in the EMMS data model .................................................................... 26
Table 15 Market Ancillary Service Payment by Service Type ................................................ 27
Table 16 Market Ancillary Service Payment by Transmission Node ...................................... 27
Table 17 Market Ancillary Service Recovery by Service Type ............................................... 28
Table 18 Non-Market Ancillary Service Payment by Service Type ........................................ 28
Table 19 Non- Market Ancillary Service Payment by Contract ID .......................................... 29
Table 20 Non-Market Ancillary Service Recovery by NMAS Type ......................................... 29
Table 21 Non-Market Ancillary Service Recovery by Service Type ....................................... 29
Table 22 AS Recovery Summary Table Names .................................................................... 31
Table 23 AS Payment Summary Table Names ..................................................................... 32

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Version Release History
VERSION DATE BY CHANGES
1.0 04/03/2014 Ruchira Ray

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SETTLEMENTS GUIDE TO ANCILLARY SERVICES PAYMENT AND RECOVERY

1 Introduction
AEMO procures ancillary services to fulfil its obligations, under the National Electricity Rules (referred
herein as the Rules). These services are used to make sure the power system is operated in a safe,
secure and reliable manner.
Ancillary service costs depend on the service price and the quantity required at a given time. As these
amounts can vary substantially from period to period, costs will also vary. AEMO recovers the costs of
these services from market participants. This is all done as a part of the settlement process.
The purpose of this document is to give a high level understanding of the methodology used in the
settlement process for payment and recovery of ancillary services, undertaken by AEMO.
The first chapter gives a brief overview of what ancillary services are and a summary of how they are
paid and recovered by AEMO. The subsequent chapters detail the methodology for payment and
recovery of market and non-market ancillary services used in the settlement calculations. Worked
examples, a table of relevant data sources, a breakdown of a sample settlement report and an
explanation of ancillary service recovery and payment information available on AEMO’s website are all
provided in the appendix.

All NEM Ancillary Services can be broadly grouped under one of the following three categories:
 Frequency Control Ancillary Services (FCAS).
 Network Support and Control Ancillary Services (NSCAS).
 System Restart Ancillary Service (SRAS).

These services can be categorised into market and non-market services, (see Figure 1 and Figure 2)
For more information please see Guide to Ancillary Services in the National Electricity Market.1

AEMO procures these services from market participants by:
 Market Ancillary Service Arrangements (for market services).
 Ancillary Service Contractual Agreements (for non-market services).

1 AEMO. Available at: http://www.aemo.com.au/Electricity/Market-Operations/Ancillary-Services/Guides-and-
Descriptions/Guide-to-Ancillary-Services-in-the-NEM

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Figure 1 Non-Market Ancillary Service Summary
Non- Market Ancillary Services
(NMAS)
NSCAS SRAS
Reactive
System
Loadshed
Power
Restart

Figure 2 Market Ancillary Service Summary

Market Ancillary Services
FCAS Markets
Regulation Contingency
6 SEC 60 5 Min
Raise Lowe
r SEC
Raise Lowe Raise Lower Raise Lower
r
Fast Service Slow Service Delayed Service

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The following tables summarise the payment and recovery methods for each of the ancillary services.
Table 1 Ancillary Service Payment Summary
Ancillary Service
Payment Method Paid To Reference
Type
Based on the market clearing price and The scheduled
Regulation FCAS Chapter 2.1
the quantity of service provided generator/ customer
Based on the market clearing price and The scheduled
Contingency FCAS Chapter 2.2
the quantity of service provided generator/ customer
NSCAS Reactive Paid based on contractual agreements Contracted market
Chapter 3.2
Power with participants participant
Paid based on contractual agreements Contracted market
NSCAS Loadshed Chapter 3.2
with participants participant
Paid based on contractual agreements Contracted market
SRAS Chapter 3.4
with participants participant
Table 2 Ancillary Service Recovery Summary
Ancillary Service
Recovery Method Recovered From Reference
Type
Market participants with
Market Participation Factor
Regulation FCAS Causer Pays basis Chapter 2.1
(MPF) and residual from
market customers
Raise services are recovered
Recovered in proportion to energy from generators; lower
Contingency FCAS Chapter 2.2
consumption / generation services are recovered from
market customers
Recovered in proportion to energy
NSCAS Reactive
consumption – in benefiting Market customers only Chapter 3.3
Service
regions
Recovered in proportion to energy
NSCAS Loadshed
consumption Market customers only Chapter 3.3
Service
– in benefiting regions
Recovered equally from
Recovered in proportion to energy
SRAS market customers and Chapter 3.5
consumption / generation
generators

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SETTLEMENTS GUIDE TO ANCILLARY SERVICES PAYMENT AND RECOVERY

2 Market Ancillary Services
Frequency Control Ancillary Services (FCAS) are used by AEMO to maintain the frequency on the
electrical system, at any point in time, close to fifty cycles per second (50 Hz) as required by the NEM
frequency standards set by the AEMC Reliability Panel.
FCAS is divided into:
a) Regulation services.
b) Contingency services.
2.1 Regulation FCAS
Regulation FCAS can be described as the generation / demand balance correction in response to
minor deviations in demand or generation. There are two types of Regulation FCAS services:
a) Regulation Raise (RaiseReg): Requires participants to add MW to the system in order to raise
the frequency to the required range.
b) Regulation lower (RaiseLower): Requires participants to take MW out of the system in order to
lower the frequency to the required range.
2.2 Contingency FCAS
Contingency FCAS refers to generation/demand balance correction in response to major contingency
events such as the loss of a generating unit or a loss of load.
There are six types of contingency FCAS services:

i) Fast Raise (6 second Raise)
Service provided within 6 sec of contingency event
ii) Fast Lower (6 second Lower)
iii) Slow Raise (60 second Raise)
Service provided within 60 sec
iv) Slow Lower (60 second Lower)
v) Delayed Raise (5 minute Raise)
Service provided within 5 minutes
vi) Delayed Lower (5 minute Lower)

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SETTLEMENTS GUIDE TO ANCILLARY SERVICES PAYMENT AND RECOVERY

2.3 FCAS Recovery
For each dispatch interval, AEMO’s dispatch engine (NEMDE) determines a market clearing price for
each of the eight FCAS markets. This price is used to determine the payments to the FCAS providers.
The payments for FCAS are then recovered from market participants (see Table 2). The recovery
method for each type of FCAS is detailed in the following subsections.
2.3.1 Contingency FCAS Recovery
2.3.1.1 Constraints
As outlined in the Rules, AEMO procures contingency FCAS to meet a series of binding constraints
(also known as Requirements), by region. AEMO pays for the cost to the contingency service provider
for meeting the binding constraints. These FCAS payments are then recovered from market
participants by local recovery (i.e., recovered based on the regions in which the constraint was
required) or global recovery (i.e., recovered across the entire NEM).
The constraints that are binding may differ over a given dispatch interval, for a given region. The
binding constraint IDs are given in the table, dispatch_fcas_req found in the EMMS Data Model. The
binding constraints are calculated every five minutes. For a description of the constraint IDs, please see
gencondata.
For more information on constraints please see the FCAS Constraint Equations2 and the Constraint
Formulation Guidelines3 documents available on AEMO’s website.
2.3.1.2 Calculating Lower Contingency FCAS Recovery
Lower contingency FCAS costs are recovered from market customers only. For each lower contingency
FCAS, the following formula is applied for each constraint to calculate the service recovery by
participant over a five-minute interval. This is then aggregated over the half hour period to give the
recovery over the trading interval:

Where:
The binding constraint required to be met in the five minute
Constraint [X] =
interval
The amount recovered from the participant, for lower FCAS
Lower_FCAS_contingency
= contingency service, for the cost of meeting the required
recovery
Constraint [X] in the five minute interval
The cost associated with meeting the binding constraint, in the
Total adjusted cost of constraint
= five minute interval, paid by AEMO to the FCAS service
[X]
providers
Total customer energy by
Total energy consumed for the participant across the regions in
participant in the requirement =
which Constraint [X] was a requirement
region
Total customer energy in the Total energy consumed across the regions in which the
=
requirement region Constraint [X] was required as a binding constraint

2 AEMO. Available at: http://aemo.com.au/Electricity/Market-Operations/Ancillary-Services/Guides-and-
Descriptions/FCAS-Constraint-Equations
3 AEMO. Available at: http://aemo.com.au/Electricity/Market-Operations/Ancillary-Services/Guides-and-
Descriptions/Constraint-Formulation-Guidelines

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