A Cost-Based Approach to Elicit Ancillary Service Tariffs from Unified Capacity and Energy Tariffs

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Sezer H., Guven A. N., TOR O. B., Cebeci M. E., Teimourzadeh S.

Balkan Journal of Electrical and Computer Engineering, vol.10, no.1, pp.53-63, 2022 (Peer-Reviewed Journal) identifier


Establishing separated markets for capacity, energy, and ancillary services (AS) is one of the key steps to liberalize electricity sector and realize electricity markets. This study aims at eliciting AS tariffs from unified capacity and energy tariffs through a cost-based approach. In the proposed framework, maintaining annual revenue requirements of the power plants are considered as the main objective while separating the AS tariff from unified tariffs. The conducted study considers two types of unified tariffs, i.e. capacity and energy tariffs, and offers proper AS eliciting scheme for each type of unified tariffs. The main challenges addressed here are: 1) incentivizingpenalizing AS provision moreless than scheduled amount which is tackled through an incentive factor, and 2) preventing overall tariff increment (customer tariff) after eliciting AS tariff which is addressed by applying fixing constraint to the overall tariff at before and after AS tariff eliciting conditions. Last but not the least, AS trade between adjacent utilities and calculating the benefits from this trade are addressed. The effectiveness of the proposed methodology is assured through numerical investigations.