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Competition in Markets for Ancillary Services? The implications of rising distributed generation

Michael Pollitt () and Karim Anaya ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Ancillary services are electricity products which include balancing energy, frequency regulation, voltage support, constraint management and reserves. Traditionally they have been procured by system operators from large conventional power plants, as by-products of the production of energy. This paper discusses the use of markets to procure ancillary services in the face of potentially higher demand for them, caused by rising amounts of intermittent renewable generation. We discuss: the nature of markets for ancillary services; what we really mean by ancillary services; how they are impacted by the rise of distributed generation; how they are currently procured; how they relate to the rest of the electricity system; the current state of evidence on ancillary services markets; whether these markets ever be as competitive as conventional wholesale energy markets, and offer some conclusions.

Keywords: ancillary services; balancing energy; frequency regulation; reactive power; constraint management; reserves (search for similar items in EconPapers)
JEL-codes: L94 (search for similar items in EconPapers)
Date: 2019-08-21
New Economics Papers: this item is included in nep-ene, nep-ind and nep-reg
Note: mgp20
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