The Economics of Electricity Markets

12Frequency-Based Dispatch of Balancing Services

Chapter 11 focused on the question of the efficient handling of contingencies. We saw that, at least in theory, contingencies can be efficiently handled through the normal optimal dispatch process operating over very short timeframes, taking into account the ramp rate and energy limit constraints that arise on those short timeframes. However, this is not how contingencies are handled in real power systems. Instead, it is typically the case that during the dispatch interval, balancing services are dispatched to handle frequency variation. This chapter focuses on the implications of this approach.

12.1 The Intradispatch Interval Dispatch Mechanism

In principle, as we have seen in Chapter 11, the efficient short-run dispatch can be achieved through the conventional optimal dispatch process. However, this might require running the dispatch process very frequently – perhaps even at time intervals much less than 1 s. There could be genuine practical difficulties in doing so – not least of which is handling the large information flows and computational requirements. In addition, frequent operation of the dispatch process gives rise to frequent determination of prices which, while efficient, results in a very substantial information processing and storage task by market participants and which complicates the process of defining risk-management instruments.

Let us suppose that it is simply not feasible to carry out the optimal dispatch ...