and demand are better understood. As discussed
above, nodal pricing provides a locational signal
for non-network alternatives.
Flexible resources provide a range of system
services, which may each be rewarded. As well
as substituting for or deferring new network
investments, services provided by flexible
resources include balancing and system stability.
To provide balancing services, electricity storage
can hold surplus energy until it is needed, and
demand response can shift demand to when
electricity is being generated. To provide system
stability, electricity storage and demand response
can adjust system voltage and frequency. In order
for flexible resources to deploy at volumes that
bring the greatest benefits, mechanisms exist to
reward them for the system services they
provide.
A simple set of markets for each system service allocates existing flexible resources and
signals investment need. Storage and demand
response are already actively engaged in balancing supply and demand in several wholesale
markets. However, markets for system stability
are typically not developed enough to allow
flexible resources to participate to their fullest
extent. Procurement mechanisms for system
services typically specify these services in terms
of the properties of the thermal generators that
historically provided them, which often closes
these mechanisms to new, low-carbon flexible
resources. Recent attempts to create procurement
mechanisms for flexible resources have resulted
in a patchwork of complex and mutually inconsistent set of mechanisms. For example, in Great
Britain, electricity storage facilities providing a
short-term ancillary service called enhanced frequency response are not allowed to participate in
the capacity mechanism. A set of simple markets
to reward all system services provided by flexible
resources is needed to ensure adequate investment to provide non-network alternatives.
(3) Model for control of decentralised
resources
While distribution networks today are largely
passive, they will need to become active to
accommodate distributed resources. As demand
on the distribution network is typically inflexible,
generators on the transmission system operate
flexibly to meet demand and maintain system
security. As decentralised electricity resources
(distributed generation, storage and demand
response) are deployed in the distribution network, these resources will also need to operate
flexibly.
Distributed resources increase the complexity
of the electricity system. The optimisation of
electricity system operation involves finding the
optimal volume of output and consumption of
every resource in the power system. A conventional, centralised electricity system typically
includes a limited number of large
transmission-connected generators, suppliers and
large industrial consumers with flexible demand.
However, a decentralised electricity system will
include a very large number of small decentralised resources. The number of resources to be
optimised might increase by a factor of several
million.
A similar increase in computational demand
would occur if the temporal resolution at which
resources are controlled increases. For example,
shifting from hourly to real-time (second-bysecond) settlement of all dispatch and consumption actions would increase the computational
demands of optimal system balancing by a factor
of 3,600.
If the system is too complex for a single
system operator to balance, a hierarchy of
resource control will be needed. A full optimisation of a decentralised electricity system would
have very significant computational requirements. If computing technology is not able to
meet these requirements, then control of the
system will be distributed.
Virtual power plants (VPPs) and distribution
system operators have a role to play in a hierarchy of resource coordination. VPPs, also known
as aggregators, could coordinate (aggregate)
decentralised resources and coordinate them
individually to present the system operator at the
transmission level with a level of net generation
(or consumption). If the system is complex, more
than two levels of resource coordination might be
572
S. Yaodong and A. Gillespie
above, nodal pricing provides a locational signal
for non-network alternatives.
Flexible resources provide a range of system
services, which may each be rewarded. As well
as substituting for or deferring new network
investments, services provided by flexible
resources include balancing and system stability.
To provide balancing services, electricity storage
can hold surplus energy until it is needed, and
demand response can shift demand to when
electricity is being generated. To provide system
stability, electricity storage and demand response
can adjust system voltage and frequency. In order
for flexible resources to deploy at volumes that
bring the greatest benefits, mechanisms exist to
reward them for the system services they
provide.
A simple set of markets for each system service allocates existing flexible resources and
signals investment need. Storage and demand
response are already actively engaged in balancing supply and demand in several wholesale
markets. However, markets for system stability
are typically not developed enough to allow
flexible resources to participate to their fullest
extent. Procurement mechanisms for system
services typically specify these services in terms
of the properties of the thermal generators that
historically provided them, which often closes
these mechanisms to new, low-carbon flexible
resources. Recent attempts to create procurement
mechanisms for flexible resources have resulted
in a patchwork of complex and mutually inconsistent set of mechanisms. For example, in Great
Britain, electricity storage facilities providing a
short-term ancillary service called enhanced frequency response are not allowed to participate in
the capacity mechanism. A set of simple markets
to reward all system services provided by flexible
resources is needed to ensure adequate investment to provide non-network alternatives.
(3) Model for control of decentralised
resources
While distribution networks today are largely
passive, they will need to become active to
accommodate distributed resources. As demand
on the distribution network is typically inflexible,
generators on the transmission system operate
flexibly to meet demand and maintain system
security. As decentralised electricity resources
(distributed generation, storage and demand
response) are deployed in the distribution network, these resources will also need to operate
flexibly.
Distributed resources increase the complexity
of the electricity system. The optimisation of
electricity system operation involves finding the
optimal volume of output and consumption of
every resource in the power system. A conventional, centralised electricity system typically
includes a limited number of large
transmission-connected generators, suppliers and
large industrial consumers with flexible demand.
However, a decentralised electricity system will
include a very large number of small decentralised resources. The number of resources to be
optimised might increase by a factor of several
million.
A similar increase in computational demand
would occur if the temporal resolution at which
resources are controlled increases. For example,
shifting from hourly to real-time (second-bysecond) settlement of all dispatch and consumption actions would increase the computational
demands of optimal system balancing by a factor
of 3,600.
If the system is too complex for a single
system operator to balance, a hierarchy of
resource control will be needed. A full optimisation of a decentralised electricity system would
have very significant computational requirements. If computing technology is not able to
meet these requirements, then control of the
system will be distributed.
Virtual power plants (VPPs) and distribution
system operators have a role to play in a hierarchy of resource coordination. VPPs, also known
as aggregators, could coordinate (aggregate)
decentralised resources and coordinate them
individually to present the system operator at the
transmission level with a level of net generation
(or consumption). If the system is complex, more
than two levels of resource coordination might be
572
S. Yaodong and A. Gillespie