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12 Nov 2024
Ovais Kashif

CAISO’s Ancillary Services: A beginner’s guide to Regulation and Reserve

The California Independent System Operator (CAISO) manages the flow of electricity across 80% of California and parts of Nevada. One of its main objectives is to ensure the frequency of power on the grid stays at around 60 Hz. It achieves this by procuring and deploying Ancillary Services.

But why does frequency change? And how do the Ancillary Services correct deviations in system frequency?

Ovais explains how CAISO’s Ancillary Services work.

System frequency is the speed at which generators on the grid are spinning. If there’s an imbalance between generation and demand, some generators slow down or speed up, causing the frequency to shift.

Keeping the frequency close to 60 Hz makes sure the lights stay on.

Each Ancillary Service is designed to incentivize resources to adjust their output when the system needs it most. They secure capacity from resources to regulate the system frequency and reconcile short-term imbalances between supply and demand.

To read our beginner’s guide to ERCOT’s Ancillary Service, head here.

The entirety of this article is completely free to view - you just need to sign up for a free Modo Energy account. Find out:

  • What CAISO’s main Ancillary Services (Regulation, Spinning Reserve, and Non-Spinning Reserve) actually do.
  • The specific requirements of each service - in terms of duration and capacity.
  • And when CAISO deploys each service.

What are CAISO’s Ancillary Services?

There are four main Ancillary Services: Regulation Up, Regulation Down, Spinning Reserve, and Non-Spinning Reserve.

The Regulation services continuously balance system frequency by requesting small increases or decreases in output from resources.

Reserve services kick in to correct significant deviations in system frequency, like when a large generator trips offline.

Spinning Reserve is drawn from resources with additional capacity that are already operating in sync with the grid. These resources are expected to respond in under a second to arrest falling frequencies.

Non-Spinning Reserve is provided by resources that are available but not running. These resources are expected to come online and ramp up within a minute of being called on.

Battery energy storage systems are eligible to provide all of these services

Beyond these four, CAISO procures three additional services as part of long-term, reliability-must-run (RMR) contracts. These are Replacement Reserves, Voltage Support, and Black Start Capability. They are procured outside of day-to-day market operations - but still support the reliable operation of the grid.

When does CAISO deploy its Ancillary Services?

Resources awarded Ancillary Service contracts respond to changes in system frequency in accordance with the current CAISO tariff documentation.

Regulation is continuously deployed to correct frequency deviations around 60 Hz.

Corrective actions from resources are not triggered within a range around this frequency, known as a ‘deadband’. This helps avoid dispatching regulation services for very small, short-term fluctuations, which reduces unnecessary wear on equipment.

In CAISO, the specific deadband setting can vary depending on system needs, but it generally ranges around ±0.036 Hz.

Any frequency deviations below 59.92 Hz trigger resources awarded to provide Reserve Services, with resources providing Spinning Reserve required to respond in under a second.

Current regulations specify that these resources must ramp power output to at least 10% of their awarded capacity in 8 seconds and 100% of their maximum award in 10 minutes. Typically, they are the first to be deployed in emergency conditions.

Non-spinning Reserve is slightly slower and requires resources to come online in under a minute. They are then required to ramp up to 100% of their awarded capacity in 10 minutes.

If these services fail and frequency drops below the under-frequency load shedding (UFLS) threshold, CAISO may decide to issue controlled blackouts to restore balance to the system.

How much Ancillary Service capacity does CAISO procure?

CAISO procures enough volume to cover the requirements set by the Western Electricity Coordinating Council (WECC) and North American Electric Reliability Corporation (NERC). These requirements are based on the historical need for each service and anticipated changes in operating conditions.

The system operator aims to secure 100% of its Ancillary Service requirements in the day-ahead market the day before delivery. Any additional capacity is then procured in the real-time 15-minute market (FMM).

The last three years have seen a steady rise in procured Ancillary Services capacity.

This is due to increasing volatility in the balance of supply and demand, largely brought on by the substantial buildout of wind and solar generation. Surges of solar production in the afternoon result in generation quickly outstripping load, leading to twice as much Regulation Down required compared to Regulation Up.

Historically, Reserve requirements were split equally between spinning and non-spinning. In March 2023, following changes to WECC and NERC reliability standards, CAISO operators began procuring 20% of reserves as spinning reserves and the rest as Non-spinning Reserves. Coupled with a slightly lower reserve threshold, this resulted in a sharp drop in Spinning Reserves in 2023, as seen in the chart above.

What are the requirements for CAISO’s Ancillary Services?

Each Ancillary Service has its own qualification requirements. To become eligible to provide any of these services, a resource needs to prove it has the technical capability to deliver.

Some of these standards are true across all services.

For example, only resources with a rated power of 500 kW or more are allowed to provide Ancillary Services on their own, except for energy storage, which has a lower minimum rated power of 100 kW.

The resource must also have a standardized control system known as Automatic Generation Control (AGC). This allows CAISO to monitor and automatically adjust generator output in real time to maintain the grid's stability.

Resources are compensated not only for the capacity they reserve for regulation but also for ‘mileage,’ which measures how much they adjust their output in response to AGC signals. Fast, accurate responses to AGC signals are rewarded with additional compensation.

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