IEEE Power & Energy Magazine - September/October 2021 - 36

factors such as the measurability/fungibility
of a product, the
competition and co-optimization
scope, complexity and simplicity,
and locationality. This section
introduces various options
for market designs for each ESS
stream under considerat ion,
namely, operating reserves, frequency
management, synchronous
services, and inertia.
Operating Reserves
Energy markets must maintain
supply and demand in instantaneous
balance with prices set
through a spot market. Market
participants often have separate
contracts across their portfolios
to manage the risk around the
energy spot price. The market
operator, however, typically does
not see these contracts. Instead, it
must rely on faith that participants
will display economically rational
behavior and take advantage
of high prices at times of supply
scarcity. This trust is increasingly
being tested by the changing nature
of generation, with the " invisibility "
of behind-the-meter
distributed PV generation and
the variability and uncertainty of
large-scale wind and solar [Figure
4(a)]. The likely result is the
system operator managing the
system more conservatively, leading
to greater VRE curtailment as
risk becomes excessively high.
The possible design of an operating
reserve or the ramping availability
service that is under current
consideration may help address
this challenge in the NEM.
There are several market
options to procure operating re -
serves, including 1) obtaining
firm availability in the dispatch
interval 30 min ahead [Figure 4(c)],
2) holding a certain level of spinning
callable reserve to be triggered
to dispatch as energy,
and 3) securing operating reserve
headroom in the coming
5 min to dispatch as energy. With
36
ieee power & energy magazine
september/october 2021
1
2
Directed ESS/Self-Provision
No Formal Process for Procuring ESSs
* Directions/Interventions by AEMO
(Inertia, System Strength)
* Market Participant Self-Procurement
(Operating Reserves)
Structured Procurement of ESS
ESSs Provided via Structured Nonspot Market
Mechanisms
* Bilateral Contracts With AEMO (RERT) in Ahead
Time Frames (With Real-Time Optimization)
* Standards, Technical Requirements, and
Structured NSP Provision/Investment
(Voltage Control, MPFR, System
Strength and Inertia [When Possible
Under Minimum-Level Frameworks])
NEM
Status
Quo:
Operating
Reserves
System
Strength
Inertia
Mandatory
Primary
Frequency
Response
System
Restart
3
Spot Market-Based ESS
ESSs Procured Through Spot Market-Based
Mechanisms
* Nested, Co-Optimized Design
(FCAS and Energy)
* Demand Curve Concepts
* Potential ESS Contracts for Difference
(Relative to Real-Time Spot Energy Prices)
Contingency
Reserve
Regulation
WEM
Status
Quo:
Mandatory
Droop
System
Strength
Inertia
System
Restart
Contingency
Reserve
Regulation
figure 3. The spectrum of opportunity for ESS in the NEM and the WEM, indicating the status of current ESS market mechanisms, with an implicit axis of " greater market
efficiency " toward the right. RERT: reliability and emergency reserve trader; NSP: network service provider; MPFR: mandatory primary frequency response; FCAS: frequency
control ancillary services. (Source: Adapted from the 2020 FTI Consulting Report to the ESB.)
IEEE Power & Energy Magazine - September/October 2021

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